Monday’s slide followed indications of rising output from key producers Russia and Iraq at a time when forecasters have trimmed their demand projections due to weak global economic growth.

A long rally in the greenback, which gained 11 percent last year against a basket of major currencies, has also weighed on the dollar-priced oil market by making crude more expensive for buyers using weaker units.

Analysts are warning of further losses to come for the black gold.

Oil has dropped about 50 percent since June on worries about weak demand and a decision by the Organization of the Petroleum Exporting Countries not to cut output in response to lower prices and higher supplies.

Monday’s heavy losses are a reminder to the market “that oil fundamentals have not changed just because we entered into the New Year,” said Daniel Ang, investment analyst at Phillip Futures in Singapore.

“To further exacerbate the problem, a New Year means a new slate for oil bears and with them coming back to the market, this pushes the prices down further,” he said.

CMC’s McCarthy said prices could stabilise if global production is reduced following plummeting prices, and “the likes of China and the European Union revise their demand outlook this quarter.” (AFP)